TMBA 560: 3 Strategies for Acquiring Wealth
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A few weeks ago on this podcast, we mentioned that we had started writing a new book based around The 1,000 Day Principle, a recurring topic we've talked about many times.
In doing research for that book, a few common themes have started to emerge.
There are several different paths to becoming wealthy, some of which follow traditional social norms, and others exist in the fringes of society that many listeners of this show might find themselves in.
On today's podcast, we are discussing three specific strategies for acquiring wealth that we have come across time and again. These are by no means the only ways to become wealthy, but they are three of the most common methods that we have seen people use to get there.
Stick around to the end of the episode to hear some thoughtful and funny listener messages we received in response to last week’s call for ‘Coronavirus related stories’, including one listener who shares the very real challenges of working from home with small children.
Listen to this week's show and learn:
The most traditional path to acquiring wealth in Western society. (7:33)
Whether frugality is a viable path to becoming wealthy. (16:45)
Why increasing your income might be a harder problem than saving your money. (24:07)
A strategy for becoming wealthy that abandons the traditional American lifestyle. (29:25)
Some of our favorite messages that were submitted by listeners this week. (43:46)
Mentioned in the episode:
Before the Exit - Our New Book
TMBA Masterminds
Partner With Us
The Dynamite Circle
Dynamite Jobs
Dynamite Deals
Tropical MBA on YouTube
Dave Ramsey
When the Stock Market Doesn't Need the Economy
Journey Beyond Travel
ShimoKita Bam Bam
Enjoyed this podcast? Check out these:
TMBA424: Three Scripts for Entrepreneurship
TMBA548: The First 1,000 Days of Running an Agency
TMBA559: A Summer in Review
This week's sponsor:
Today's podcast is sponsored by Smash Digital.
Smash Digital is a growth agency filled to the brim with unicorn images and SEO memes.
A team of SEOs who actually know how to use SEO instead of just selling SEO to people who don't know SEO.
An agency with so much link juice, you'll need a mop and a bucket to clean it all up.
A group with actual skin in the game, ranking their own portfolio of profitable businesses, and offering the exact same services to clients.
If you want to have Smash Digital in your back pocket, check them out over at SmashDigital.com and a big thanks to Smash Digital for sponsoring the show.
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Thanks for listening to our show! We'll be back next Thursday morning 8AM EST.
Cheers,
Dan & Ian
Full Transcript
TMBA Ident.
Dan: All right, welcome back to the TMBA pod. If I sound a bit subdued, it's because today's the last day of my vacation Boss Man.
Ian: Ah, poor you.
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Dan: I know, very sad. But the exciting news, I’m headed back to Austin. We got a lot of exciting projects on the table for September. So we're looking forward it, looking forward to the show. We got a lot of good guests coming on. We've got a lot of wonderful listener feedback. In fact, I want to thank everybody who from last week's episode emailed me Dan at tropical mba.com and sent us voice messages about their COVID stories and some of their feedback on our opinions on last week's show. They've been thoughtful, respectful, moving, in some cases hilarious and we will be playing some towards the end of the show. Any quick news at the top here Bossman. Before we jump into today's episode.
Ian: Just getting my trailer ready for you to spend the night in my backyard again.
Dan: Of course, there's nothing that's gonna get me moving around like the prospect of free rent, hopefully a concept we can work into today's topic. So one of the things I want to do is bring the listeners into an update, and a little bit of inside baseball on a project that we've got going on and we mentioned a few weeks back.It's a forthcoming book on a theory we've been testing out with the listeners of this show in real time, over the past decade. And it's called, of course, ‘the 1000 day principle’. And I want to talk about one of the chapter ideas in the hopes that some listeners listening today weigh in and give us their feedback so that we can better express what some of the tenants of this community are and what this wealth journey is all about.
Because fundamentally, for me, Bossman, the thousand day principle, is an attempt to express what was previously, to me, a somewhat illegible path towards wealth and personal freedom. And I think that that's what essentially has resonated with the original idea of the thousand day principle, which is - so many people that have been down that wealth journey have turned around and said, ‘Hey, I recognise that I felt that I went through those experiences. And that rings true to me’.So, Ian, before we proceed, I just want to define the ‘1,000 day principle’, it essentially states that in order to reproduce your professional salary, from a business that you own yourself, that'll take three years of full time effort. And the reason this is more broadly interesting, and what we're going to talk about today is that this is essentially, aside from the apprentice phase, which is where you learn about all this stuff and you start to make moves towards say, day one. This phase, this 1000 days, is fundamentally the first step on what we're seeing as a relatively speaking, reliable path towards personal wealth and personal freedom.
And what we want to do today is compare it, and I think this is going to be important in the book and why I want to bring it up on the podcast, is compare it to some other dominant wealth trajectories and today we’re just going to choose three.But if you, as the listener, there’s something that resonates with you or that there's something positive about other wealth trajectories that the ‘1,000 day principal’ thinking could learn from, or other wealth trajectories that you found out to be bunk or incorrect or, importantly, misleading. Those are all things that I think would be worth addressing in this chapter of the book.
Ian: Dan, I think the idea here is that the thousand day career pattern for entrepreneurs is evolving, basically. And it's evolving because other models are broken. You know, the ways that generations have traditionally earned a living, it's fundamentally broken in a lot of ways. These institutions are crumbling, and we're having to find new ways forward.
Dan: That's true and also finding ways to reinterpret the past. So you know, one of the things you can do once you're equipped with this ‘1,000 day principle’ or thousand day thinking, you can go back and look at other wealth strategies and you can ask yourself, well, where were their thousand days?
Because I think any good strategy basically brings three elements to the table. It brings a mindset element. It brings strategic elements. And it brings, importantly, timing elements. And one of the things I'm always curious about is when you hear things like mindsets and strategies from wealthy people about how to get wealthy, one of the things that always perks up in my mind Ian is, ‘Well, how much time is it going to take? Because right now, I'm broke’.
Ian: Dan, another thing that's really important in these strategies, for me at least as ‘relevance in time’, meaning like, will this strategy work given its 2020? Things that worked 50 years ago don't necessarily work now and things that work now probably won't work 50 years from now. So you have to adapt to the times. You have to figure out what's working now. And what's going to work through your lifetime. And I think it's quite possible, because we've already seen it happen, that how people start their trajectory, how people start their thousand days, might be drastically different 20 years from now.
Dan: Yeah, but one of the things that's really important for me and why I wanted to do this episode and sort of cross check the 1000 day thinking with other brands of thinking and sort of reach out to the listeners and see what sort of alternative strategies might be compelling to them, is that when you accept these paths, the potential payoff could be, for some strategies three years, there could be intermediate steps after one, but a lot of these strategies were talking five, 10,15, 25, 35 years and they're non falsifiable in the short term. In other words, you're not going to get feedback every day about whether or not you chose the right path. And that's why I think really digging in and asking yourself what's good and bad, and suspect about these different strategies is a really critical part of this.Because part of the difficulty with accepting 1000 day thinking is that it essentially suggests that you're going to need to take a step back, go into something of a pain cave and something of a blindness and uncertainty in order to ultimately emerge way ahead. And so it does have this kind of ‘question mark-ey’ kind of vibe to it, whereas a lot of competing strategies that we'll get into today have some more clarity to them. And that's part of the reason why I would not only want to do the comparison, but flesh out what these thousand days can and do look like on repeated attempts because I think it is partially the legibility that makes a theory powerful.
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Dan: And so, that first approach, Bossman, and again, today we're going to cover three, we're going to call ‘the traditional route’ and probably for the final book copy, I'll come up with a snappier title. But the traditional route essentially suggests that if you get a good college education, that will sort of get you a high earning job that is secure and relatively stable.
If you roll out this traditional route over the course of, you know, typically it's talked about two to three to four decades, that you'll be able to not only live a good lifestyle throughout those decades, but that you'll be able to save enough through traditional retirement vehicles, like managed savings accounts, home ownership, sensible hedging in bonds, financial managers and so on, that by the time you reach, you know, your 60s, or if you're sharp, maybe your late 50s or mid 50s, you'll be able to have a great deal of flexibility in terms of how you spend the remaining years of your life.
Ian: Whew. Dan, you mentioned the word ‘flexibility’. Here I am nearly 40 years old, had a little spill on my dirt bike the other day, the Colorado mountains, and I am still feeling the effects on my ankle. So I can only imagine 10 years from now what my flexibility level is going to be like, and how I'm going to be able to enjoy life if I'm already starting to feel like this.Gosh man, if you would have asked me what life was gonna be like at 40 when I was like 18, I would have been like, ‘That's old man territory’. But this is more like the 10,000 day principle, right? Thirty years what life is going to be like? And the interesting thing, I guess, about this concept, for me, is - this is the one that most of our parents did - going to school and school back then was pretty cheap. And the trajectories were getting to be known and they were stable and companies had pensions and health care and all that good stuff. And it worked out great, I think, for a lot of boomers, their regrets aside maybe from in terms of what they wanted to do with their lives versus what they did do. And I think a lot of them are in financially pretty sound places. I think you did what you were told and it worked out.
I think we're starting to see obviously cracks in that model. I think there's very few things that you can go to school for, traditional education, university and have a clear trajectory for the next 30 or 40 years. I would almost venture to say, Dan, that getting an associate's degree or some kind of accreditation, like, even say, like welding, or something like that might be just as beneficial.
Dan: One of the one of the interesting things about the trades that people don't bring up very often is that you have an opportunity to have a really strong arbitrage between your living expenses and your earning. If you think about traditional jobs, say, in the financial sector, you typically have to live a very expensive lifestyle to have access to that sort of earning.
Ian: That's actually why I brought up welding. I know a guy here in Austin, that's an offshore welder. He spends like six months out at sea at a time, kind of gets to pick and choose his jobs and then he comes home and he drives his convertible Porsche. He lives very well. And he doesn't work that much. But he does have one of these, I'd say, kind of entrepreneurial jobs.
Dan: I'll say this about, you know, what I see as the traditional route. I mean, obviously, we could have a whole episode about the potential problems with how much of a loan you can take to get how much of a degree in America right now, and what actually the ROI on that is going to be. Not so sure I want to go down that route right now. I mean, there are plenty of careers out there where you have high earning potential, where you can affect that earning potential where you can move around quite a bit. And, you know, if you select wisely, this might not be a bad way to go. And it certainly doesn't expose you to the upside, that maybe an entrepreneurial path ha or, certainly, flexibility. And I would say the ‘non chronicness’, like this idea of like, you know, if you do select the strategy, that you're going to have to be on the stick for decades on end regularly. But you do save yourself from something I think entrepreneurs can relate to, which is what I would call ‘existential stress’, or maybe a sense of like responsibility regarding the unknown.Not to suggest that not everybody has unknowns in their lives. But at least when you selected a strategy of the traditional route, you have concepts around your work, your savings, your progression towards wealth, that are relatively clear. Whether or not they're accurate or not, might be another story. And it certainly will be subjected to some luck. But this idea that you can put those issues to bed more or less on a daily basis, I think is a great benefit of the traditional route for a lot of personality types, for a lot of people.
Of course, there are downsides for outsourcing that responsibility, which you've called on the show, ‘the turkey problem’, you know. If you don't take responsibility for how you're earning income, if you like, outsource it to somebody else, you're gonna be the last one to know when that process breaks down.Whereas, an entrepreneurial strategy, you typically have a one to one relationship with that income. And downside of that is, of course, stress and uncertainty. The upside is you’re doing insider trading, if you own your own asset.
Ian: The idea, though, of this career, Dan, and that you're not gonna have worries, I think I think that could be a thing of the past. I see most people with careers these days, in traditional jobs, having almost as many worries as I have. I mean, they are different types of worries. But certainly, they're ones of stability. Certainly they keep them up at night. Certainly their work doesn't always turn off at 5pm. I think that certainly there's other downsides too.You know, one of the things that I've been thinking about lately, now that I have a young child is just the amount of time that I get to spend with him and around home and some of the things that I get to see. Now couple that with the amazing vacations and the time that we get to spend out in this country, when we're allowed to, and travelling and doing all the cool things that we do at 3pm on a Wednesday. If you look at it, the equation with stress, for me at least, is offset. So it's like, yeah, I have a lot more responsibility. I have a lot more stress. I also have a lot more fun.
Dan: It's in line with this kind of reflection I've been doing because, you know, in our business recently, we've selected to hire more people and do things that are much more ambitious. And we've talked about this over the years, where: ‘Is there really a different amount of stress between managing 15 people and managing three, or managing zero or managing a career?’ And I think it's like an open question.
We speak with a lot of entrepreneurs who are like, ‘I don't like managing people, I want to keep it simple. I want to keep it to this level’. Like they're kind of dealing with all the same amounts of stress that someone with a job or someone with 15 or 50 employees is dealing with. It's just how they're framing it that's different, you know, and then ultimately, what responsibility they're willing to take on.
I don't know. I do think it's like an active and open question. But there's certainly part of me that thinks like, what you're suggesting that, indeed, we're all under these kinds of stresses anyway, so why not choose the path with the outsized outcomes?
Ian: I think different people handle stress differently too. Some people just don't want to deal with the type of stress that entrepreneurship brings. But I'll tell you, I think it's like a learned skill.
Dan: 100%
Ian: A way to manage your stress, I don't think that you necessarily need to be built for it or born for it per see.
Dan: So the first strategy then, is the traditional route. Again, what we're trying to do is solicit ideas from the listenership because I don't think it makes sense to say, ‘Hey, this is all bad’. I think it makes sense for us, as people who's working on making this path legible, to be as what we used to call it back in the university, we used to call it giving a ‘beneficial reading’. That way, when you're, you know, weighing pros and cons and looking at different strategies. It challenges you, and it brings the best out in competing theories.
And our competing theory, relative to the traditional route would suggest, in terms at least an education and jobs, that you should focus on learning while you earn aka apprenticeship and specifically learning the skills of growing and sustaining small businesses that provide for you and your family in ways that you define long term.
Dan: So let's get moving on to our second strategy. Again, these are strategies for pursuing wealth. And this one is called the ‘Savings Saviour’, also known as ‘financial independence, retire early’.They say that the best way to achieve wealth is to get a high paying job, ideally, also a high paying low stress job even more ideally, which is even more difficult to do, I would say. To pay down those student loans that that expensive education got you and to, you know, buy a lot less house, pay off your cars, acquire no debt, essentially, save as much money as you can eventually build up enough money in your retirement accounts through a programme of radical savings and dropping it to the bottom line. There's an opportunity for people that make good money and live in secondary or tertiary cities to potentially retire as early as their early 30s or mid 30s if they follow a very, very frugal ‘Fire’ savings plan.
Now I gotta say Ian, one of the reasons I want to bring up ‘Fire’ in our book and talk deeply about it, is that I love these ideas. I think that one of the great things about personal finances is that you can experience the benefits of entrepreneurship right away. Because a lot of ‘1000 day principle’ style thinking suggests you have to apprentice and learn this complex know-how of entrepreneurship and then you need to apply it to uncertainty. And eventually try to get value, turn it into money, turn it into your wallet, and it becomes this complicated stew of skills and uncertainty.
Whereas when you look at things like ‘Fire’ and you say, fundamentally, what any good financial plan does is drop profit to the bottom line eventually, at some point. That can get complicated when you get into entrepreneurship. But at least when you look at your own wallet, you ask yourself, ‘Well, if I'm gonna spend my whole year working, how much of this? Am I going to be able to drop to the bottom line? And how much time is it going to buy me in the future?’.And for me, personally, that's a very empowering feeling. And it's a constant, it should always be there. So whether you choose the traditional path or the entrepreneurship path, you can never really go wrong with sprinkling in a little bit of ‘financial independence, retire early’. And that's why I love love exploring these ideas, how to save money, how to be smarter. Where I think this theory can go awry, is when it presents itself really as. ‘the final answer’.I would consider, you know, ‘Fire’ to be a necessary step to becoming wealthy, but not a sufficient element to becoming wealthy because, at the end of the day, it really comes down to earning. I mean, that is the big question mark that you need to solve. And so within the ‘Fire’ community, this idea that you're going to sustain a potentially high stress career that's based around a major city and you're gonna sustain it for decades upon decades, that you're going to compromise your lifestyle in the meantime. Because in part a lot of people have to live quite hamstrung because they spend all their time focusing on the first few steps of, you know, frugality, and expenses and really forget about the most important side of the balance sheet, which is the income.
Ian: I feel like Dan, we've lived a lot of this life, especially when we were starting our business. We both had our days when we got out of debt. And we celebrated that. We both lived super below our means so we can invest in our business. That was the vehicle. And I think that's one of the interesting things about this concept is that while we were saving, while we were living frugally, we're investing both our time and our money into the asset of the future. Whereas, with this traditional fire movement, you're investing your time in something that isn't your future. Right? You're investing in this career that you're eventually going to end.
Dan: Yes.
Ian: And you're investing your money in a vehicle not controlled by you, which historically has done some great things for her for people and continues to do some great things. By the way, did you see that video I sent you?
Dan: Yeah.
Ian: Of the conjoining twins. They're these comedians on Youtube. And on their shirts one says economy and one says the stock market. And the guy in ‘the stock market’ is acting out of control and irrationally and in the guy with ‘the economy’ written on his shirt is all beat up and bruised.
Dan: It is a sort of a weird setup to the strategy, which is like, ‘I am going to like, set my life up so that I have to do what I'm doing for as short as humanly possible’. You know, and there are are a lot of those sort of aesthetic qualities to the ‘Fire’ lifestyle that don't appeal to me particularly, don't go to the good grocery store, like grow that stuff yourself or like, don't hire a plumber, like learn to fix it and don't buy a car, you know, ride a bike and like don't travel anywhere, because like you might have to work for two years longer in order to pay for that trip.
There's this like this aesthetic quality that in some ways that takes on all these like non profound problems. I'm sorry to say it, but it's a relatively easy problem to solve, like to figure out how to fix a pipe in your house versus paying a plumber. So like, if you have the ingenuity to solve that problem, might you challenge yourself a bit and say, ‘Well, what if I took all that problem solving energy that I'm like spending on biking and gardening and plumbing and avoiding vacations and instead, focus it on more profound problems which are less legible and start to figure about how to generate value in the world for a lot of more people than myself, and then harvest a small percentage of it so that I can ultimately have wealth’.I'm tempted to say that there's a kind of an ‘engineery’ mindset that can often be very attracted and dogmatic about ‘Fire’ principles. Because there's this idea that, you know, life is very discrete, and it can be put on a spreadsheet, and I'll get my 4% back and the stock market always goes this direction.And I don't think that those things are a bad foundation actually for a wealth strategy. But I think you'd be much better off if you sort of opened up the afterburners and the self challenge a little bit and used that free time you want so badly to focus on the skill set called ‘entrepreneurship’. So in contrast, the 1000 day principle, and strategy here, would suggest that of course, you need to get your expenses sorted and think about investing early on.
But the reality is that making money with money is incredibly hard and largely inefficient, especially when you have say less than a million bucks in cash. So why not, instead of outsourcing that whole process, solve the simple problems of being prudent and saving a lot and then get yourself focused on the more complex and valuable problems of increasing your income.
Ian: Final idea here Dan, for me, is actually I have a friend that's like, lives the fire life. Okay. And me and him, we go back and forth all the time. And it's kind of fun to get each other's perspective on the different styles of investing. He's always teasing me about some of his, like stocks that are just going through the roof. And I'm always showing him pictures of my car and I'm like, ‘Here's what I have invested in’, you know, this 30 year old car. And I do think they're both valid approaches. But what I will say about my style of investing versus his style of investing is his style of investing is completely out of his hands. And also his style of investing lives on his computer. He can't touch it. He can't feel it. He can't visit it. He will never see a growth curve that goes up into the right like a hockey stick. Or at least historically speaking, that's never happened.
Dan: It's also very difficult to glean information from it that would then benefit the next thing. When you're outsourcing investments, there's two realities that I think people don't talk about very much, and I'll just bring them up for food for thought, is that number one, just sit down with a calculator and a spreadsheet and figure out even if you kicked ass as an investor for 10 years or whatever. You know, when I talk to people who are passionate about investing, especially when they have small amounts of capital and by small amounts of capital, I mean, maybe anything less than a million liquid. They're risking a lot to have, basically, what are mediocre returns relative to any small business you can imagine. And even in the best cases, you wouldn't achieve what you could achieve with a small business, you know, growing it say 100% year over year over a year. Want to talk about the magic of compounding, well, there you go.
Ian: That's right. And I think all I'll point out one other thing that's different between me and my friend and I think part of the reason why he is attracted to his strategy and why I'm attracted to mine is, uh, he is scared to death to go back to work at some point. It is the one thing that he fears the most. And for me, that's just not the case. I'm actually excited to go back to work because I have, I'd say, a decent amount of skills, but I'm interested in learning new skills, and I excel in that type of situation. So I think that it's just worth noting, you know.
Dan: Well, one of the things you could do is like talk to older people. And I've met a lot of people that did fire and I met a lot of people that have done ‘good career’ mixed with ‘Fire’. And one of the common concerns they have at the end of their life is how long they're going to live. Which is a really strange concern, right? The idea that you're basically worried about like outliving your principal.And you look at like the most successful members of the ‘Fire’ community, they're all essentially using their time and their savings to generate cash flow assets. Again, the critique that I brought to the first which is like if you're gonna end up at entrepreneurship and small cash asset generation, why don't you just start there? Why go through a 10 to 20 year detour, if you can start out on the right path. Hedge, right hedge, but at least be what you know, open to the fact that at some point, you're going to have a lot better results if you take control of these investments. I mean, the easy answer to that question mark in between the two things, is take a small amount of that money and start a small business.So Ian, again in the book. I currently have a draft list of a lot of these. And we just pulled out three for today's episode in the hopes the listeners would weigh in a bit. The final one we're going to talk about today, we're going to call, ‘Turn on, tune in and drop out. This strategy shares some common ground with the ‘Fire’ movement. It's a little bit of that ‘live like nobody else so you can live like nobody else’ Dave Ramsey thing. But really this kind of ‘drop out’ script is sort of like, ‘Sell your home and live in an RV or go live off the grid in Costa Rica or Lisbon or Thailand, become a perpetual traveller’. Some might even call this sort of living on the run, Bosman, going to where the sun shines the brightest, where you're treated the best, where maybe the current income that you can command is at that, you know, sweetspot ratio where you can live an excellent life without necessarily having a great deal of wealth, certainly concepts we've explored with great detail and respect on this show.There's also kind of this cool idea with this drop out script that you can cut yourself off from a kind of reality, the same kind of reality that generates a lot of stress, the kind of stresses that we might call the say the ‘standard American lifestyle’, you know, go to work, you know, get the gold watch, eventually, you know, hopefully retire for a few years. And that's the end of it sort of thing.Often, you know, the folks who choose this sort of ‘drop out’ script are seeking to live by the rules and priorities that they set for themselves and are not imposed upon them by society.You could make a case that I think would be interesting that the pricing of homes in western countries, let’s take America as an example, itself. The price of housing is part of this whole societal scheme that's propped up by so many large institutions, if you took away so many of these institutions that provided so much easy money, and that provided the liquidity to provide the loans in the first place, which might be mass savings plans, and total employment and all these sorts of central banks. That, you know, the idea that this abode would be worth that much, and would command so much of your than waking hours to pay for the abode isn't itself you could make an argument that that's all some giant sort of perpetual scam or scheme that you yourself don't want to be a part of. I mean it’s a legitimate wealth strategy, and people do it all the time.
Ian: Yeah, this one's a little bit more complicated because it can go so many different directions. So, if you decide that what you want to do is you want to live off the grid, you want to live in some kind of low cost solution, well, then it starts to sound a little bit like the ‘Fire’ movement. It's like, ‘Well, I'm controlling my expenses. So then the question is, well, did you get a degree to do whatever you're doing remotely? You know, as a high paying skill, or job or are you forging a different path? Are you starting a business? Are you learning? Is your business growing? Or are you just sustaining this life on the beach in Costa Rica or Thailand?’
Dan: It has those like important negative potentials that well, you know, you might get comfortable in that particular situation and your lack of ability to uplevel your level of responsibility, the value you create in the world, your business, your skill set, whatever that is, will then pigeonhole you there. And if you’ve identified what is a very specific situation of freedom, your freedom and financial flexibility might only then exist in that particular setup that could easily change and COVID has demonstrated that these things do change.
Ian: This is a point that's worth exploring, Dan, which is like how much does your environment impact your motivation? I've heard it from a lot of different people, that it really, really impacts them depending on where they are and the people that they're around. And I could definitely see that like, through my travels, I can see that a place like Austin, depending on who you're hanging out with can be really inspiring. And then you go somewhere like San Francisco. And maybe the people there are even more motivated to make money than they are in Austin.Whereas you go somewhere like Thailand, and you see a bunch of people that are making money. But how many of those people have eight, 9, 10 figure businesses? You know, a lot of people, they can go to Thailand and make a bunch of money. But I wouldn't say it's the majority of people.
Dan: I wouldn’t say it's the majority of people that go anywhere. And that's really the issue is that you have to be able to tap into your own singularity. It's not hard to imagine, for example, someone who's broke, doesn't have a good education that moves to San Francisco and feels really demotivated by all the douchey conversations around them all the time. All of a sudden you show up to someplace like Thailand, where people are going from zero to one all the time. And that can be extremely motivating like, ‘These people are just like me, I can move forward’. So the idea though, is that that situation is going to change right?
The people you met in that cafe in Saigon in 2014, when everybody was hanging out there, well, they might not be there in 2017. And do you have the flexibility? Have you earned the financial freedom to take that next step whatever it is for you? I think that's an interesting thing. But I think that one of the like, the really interesting, positive things that this ‘drop out’ idea taps into, and I've been chewing on this idea of, you know, how important it is for both investing for business and lifestyle purposes, like what your relative buying power is. There is this virtue in the dropout script that you kind of shed social mores and you start to define your own.You might say something like, if you're going to move to a cheap country in Europe, you might say, ‘Well, look, I make $5,000 a month, so I don't want to spend more than $1000’ and the fact that the average person in this country makes five hundred makes it such that I can sustain that kind of lifestyle. And that ratio of where I'm at is really critical for me because I want to be an investor, I want to be an entrepreneur.
And I do think this idea of like, relative wealth becomes a critical concept. Because isn't that at the end of the day what we're seeking? ‘Wealthy’ isn't this absolute figure, it's a relative figure, to what you can participate in and how much time and freedom you can buy for yourself. Again, probably to point to another virtue of dropping out to a degree, is this idea of just being able to value your time and the real X Factor, like you pointed out as well what are you going to do with it? And if you're just gonna piss it away, and go to a bunch of temples and travel around and you know, enjoy the current level that you're at, it might not be sustainable.
Ian: Yeah, there's nothing wrong with pissing it away, per se, if that's your goal. You just got to be confident in that. You just gotta you just got to own it. ‘Hey, yeah, what I'm going to do for the next 15,20 years is make minimum viable and chill out at these temples’. I will say this and this is like some of this happening with all these strategies is that there's a potential to be blindsided. Like, for example, Coronavirus comes and all of a sudden, you can't stay in Thailand. There is the potential that the market crashes, there is a potential for this and that and this and that. And so, what is your contingency plan? Is it your skill set? Is it your savings? Is it your ability to earn? What might it be that can save you?
Dan: And you know, that to me is ultimately I think, you know, looking at these three options, and we'll be looking at a lot more in the book Bossman and hopefully based on some of the emails we receive from y'all today, Dan at TropicalMBA dot com, very live issue for us is that, you know, you could have developed two sorts of insurance policies, well, actually, let's say three, I mean, and, you know, we've talked about as many as 10 on this podcast before, and they'll appear in the book and they look like things like that skill of entrepreneurship, you know, Dave Ramsey used to say, ‘Your only security is your ability to go out and bring it home’. And he was talking about the skill set of entrepreneurship, of selling, of a product, of putting a price on something and, and then making profit in return.The other insurance policy might be the wealth that you've already accumulated. And that is through a process of exposing yourself to high upside outcomes that don't result on like chronic long term inputs, like a steady income. And then finally, I think one of the things that people really value if they're terrified of the entrepreneurship path, is actually the career cache that you build up becoming an entrepreneur. In fact, most entrepreneurs that we speak to say they fail with their first few business ventures, but they almost universally consider themselves to be more employable after those failures. I find that to be a very interesting insurance policy too. The sorts of relationships you make, while you're in that state of freedom and one to one authenticity, rather than representing an organisation, tend to be really robust. They tend to put you in direct contact with your skill set, and your ability to make money. And then, in the future, if you find yourself in a situation where you are looking for a job or career, you feel much more empowered and secure in getting that deal done.
Ian:One of the ways that I guess I'm thinking about it, honestly, that I sleep well at night is just knowing that I can make money whenever I want. And that's kind of like a weird thing that probably a lot of people listening to this show or share with me, but not probably a lot of people in the world, especially in America, feel like. You know, I can wake up, I can fire up the old Craigslist machine. I can fire up the old WordPress machine, I can fire up the Twitter machine. I mean, there's just a number of different cash registers at my disposal that I feel like I can make money from today if I had to.
Dan: Well hopefully, and if people have any uncertainty about this, this show can serve as a live testament to that ability is something that can be developed. Me and you, we didn't always feel like that. You know, in fact, in the book I wrote this vignette of, I was trying to relate this process of entrepreneurship as it's actually a ‘know how’, it's something at a certain point, you can just do it because you practice long enough. And if you haven't practised long enough, you can't do it. I mean, I've seen this in people that are just getting started out, and people that we've worked with on our team, there is a long long learning curve to getting it in your bones, that you can actually do this stuff.
And I would relate it to something like learning a complex sporting skill. You know, we talked about recently, I'll bring it up again, that I'm trying to find a way to shoot a 72 on 18 holes of golf. And there was a time three or four years ago where, had you said I would do that, it would be this mystical, unbelievable achievement. But if you practice a lot and you break it down, and you realise that if other people can do it, it's also something that you can ultimately model but that it's so complex, that it's not one piece of information, one actor, one moment, that's going to mean you shoot that 72. In fact, if you go out with that mindset, it's like, ‘Today's going to be my lucky day, you're going to be having a lot of unlucky days’.And it's the same deal with a business, I guarantee you. And this is part of what the ‘1,000 day principle’ tries to posit that if you spend 1000 days with this practice, day in and day out, there's going to be a day when you wake up something and you're like, holy shit, ‘I can do it’.
Ian: There is one thing you didn't mention in there, there, Dan is the sacrifice that you're going to have to make because it's not always clear, you know, and you might find yourself in the middle of it thinking like, ‘Why didn't anybody tell me I was going to have to give this up’, or ‘Why didn't anybody tell me I was going to be feeling like this’, and it's kind of the same thing with your golf game, Dan. I think at nearly 40 years old, you can shoot a 72, there's nothing limiting in your physicality. But certainly, my friend, you do not have a family. For me, for where I am, to shoot a 72, I would have to get a divorce.
Dan: Fair enough. All right, Bossman. So this final script we were talking about was this, ‘Turn on, tune in, drop out’. And, you know, like all of these strategies, there's so much positive to learn from them. And then so much to use to critique our own mindset strategies and timelines to make them more robust. The one thing I think we would encourage from this ‘1,000 day principle’ mindset, that if you're gonna drop out, make sure that it's relevant to your enterprises at the very minimum we're talking about inspiration and relationships. But ideally, it would be a great deal more than simply lifestyle concerns. But why not? Given you're clever enough to find a great lifestyle arbitrage? Can you not find a way to advance your business interests, as well as your enterprising skill set and spirit?
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Dan:Alright, Bossman. So that's the conclusion to this session. Thanks to everybody for tolerating us just chewing the fat on some concepts that interest us because we do believe you know, at the end of the day, game selection, strategy selection, and the resulting mindsets and timelines that you know, especially the timelines that you're going to be subjected to, they're critical.If you've got thoughts for us on this topic, specifically, email them over to me at Dan at tropicalmba dot com, we're going to continue to crack away at that book. Before we go, we got some calls and emails that we received in response to last week's call for y'all to send us your COVID stories. And we got some fantastic ones. Again, pick up your phone, hit that voicemail app or voice recorder and email me your COVID story Dan at TropicalMBA dot com. We'd love to just take a listen, to hear where you're all out in the world. And that call was taken up this week by Lucas and certainly brought a smile to our faces. To hear Lucas's story. Let's play it.Lucas: Hey Ian, hey Dan, thanks so much for that latest podcast in fact, Lucas is here calling you from Tangier Morocco and I think this is a perfect moment to describe my existence right now.Fx Child chatting in backgroundLucas: Can you hear my son? He is four years old, talking about spaceships. This has been happening since March. The interruptions, continuous. ‘Astronauts can take off their clothes in the spaceships. That's true’.Yeah, this has been my life man since March, got locked down here in Tangier, where I run a little travel company, ‘Journey Beyond Travel’. And yeah,we're in the travel industry, so it hit us really hard. But that's a nice thing about being in Morocco. It's one of the places that we don't talk about too much around the DC or really, in any of the forums, you know, everyone's you know, Thailand, this or finding pockets in the US or something like that. Eastern Europe or Portugal's sometimes, but yeah, here, you know, we find a really nice kind of balance of living, which means that when something like COVID did happen, we're able to quickly kind of reduce budgets very easily, and, you know, live very well off, you know, $2-3,000 a month. But in the meantime, you're trying to get any work done without any childcare, cleaning care, help of any sort. That's tough.You kind of put in the hours early in the morning. For me that's about 5am to 7am then it's all day with the kids. And then after they go to bed, if I have any energy left, you know, I try to get a phone call or two done. Or maybe I sit and do some emails or something like that. But, it's not what we signed up for. Let's just say that. Challenging, I think, like it is for everybody. It's challenging for everybody in different ways.
But anyway, so thank you guys again. Awesome pod. Happy to be part of the DC. That's one thing I did do good during COVID actually, which was great. I finally joined the DC which is cool, because I've been listening to you guys for years, man, at least two, two, maybe three years, so that is one super positive thing that didn't come out of the Coronavirus so far. So thanks again, guys. Ciao.
Ian: Lucas, I can relate to you very, very strong story. I appreciate the call.
Dan: Very strong story.
Ian: Especially the part where your son doesn't wear any clothes. This is a constant struggle in my house. Not my problem.
Dan: Respect, Lucas. Glad this show can give you some sense of solidarity with other entrepreneurs. It's good to see you joining the DC as well. Of course Ian, last week, we talked a little bit about the fact that we haven't addressed the recent political issues involving race in the United States. We got an awesome call and response to that from listener Phil Harris, let’s play it:
Phil: Hi Dan and Ian. It's Phil Harris from the band ‘ShimoKita Bam Bam’. I'm a longtime listener of the podcast. In a previous life, I taught English in Japan for two years. After that I worked for a bank in Japan for seven years. These days I'm a 51 year old African American male with a day job in the financial industry in Boston.I like to think I'm not quite the proverbial dentist you've mentioned in previous episodes, but I do have a wife and daughter and a corporate day job. My creative outlet is making music in both English and Japanese and in dealing with the challenges of being an independent musician.
I decided to call in response to your comments in Episode 559, about Black Lives Matter. Your rationale for not talking about BLM is that TropicalMBA is not a political show and therefore you don't want to handle political topics. I have to say something doesn't quite feel right about that answer. For example, you have no problem talking about the lack of women entrepreneurs, or how few women listen to your show. I mean, it's a point of pride for you when you talk about how much people make and you do so without flinching.
Now, in the same episode 559, you talked about how rents in New York and other cities are getting cheaper, and how this is an opportunity for a budding entrepreneur on the sidelines to get involved in the game of business. I would like to point out that large numbers of black people have been on the sidelines of American life for a long time. And it feels like now, finally, the rest of America is waking up to this fact. So perhaps black entrepreneurs will get a chance to participate fairly. At the very least, this seems like an opportunity for your listeners to engage with black people who have traditionally been underserved.
So black people - they're your potential customers, potential partners, potential employees, potential angel investment opportunities. America is changing and it's one more factor an astute entrepreneur needs to be cognizant of..
So please don't get squeamish on me now. I feel that this topic is just as important as how much money do you make, how much money do your listeners make. You don't have to get political. I'm sure many of your listeners of colour, like myself have many stories that they can share about experiences with racism or any country for that matter. For us, it's just a fact of life.
So Dan, Ian, please keep up the good work. I hope I have a chance to meet you and the other members of the Dynamite Circle in Bangkok or some other city. So I love listening and I'll continue to and thanks a lot.
Dan: Shout out. Phil, appreciate those thoughts. Certainly very compelling. We also received some thoughts from the other side of the aisle, that maybe we should, you know, take even more measures to stay out of political issues. Ian, why don't you read this response?
Ian: (reads email from listener): “Hey, Dan, and Ian, thank you for this singleness of purpose comment on the latest podcast. I'm an Alcoholics Anonymous vet of over 30 years, and I know the inclusive and embracing power of that principle, people of all types feel welcome in the rooms because of it. This crucially gives them the opportunity not to die, which is an underrated achievement.
But more subtly, it gives people of all opinions the opportunity to rub up against each other and realise that maybe, just maybe, the other is not to be demonised and feared. The other becomes just another dad like me, another person struggling with everyday problems just like me, empathy and genuine human kindness grow without even trying.
Entrepreneurs and business owners do the same thing. We meet on the field of commerce with all comers. The narrow focus of a commercial transaction is a blessing. It gives the two parties the ability to join briefly in a common cause, a transaction. With luck, it happens again. All of a sudden, we see the other person as real, like ourselves. This builds human bonds and communities that are real because they're organic bottom up or in AA jargon simply ‘just one drunk talking to another’”.
Dan: Well, I gotta say, we've received so many wonderful and thoughtful comments from the listenership and we appreciate the challenge from the listenership as well as the inspiration to think along these lines. So very cool.
Shout out to everybody who sent us a COVID story at Dan at tropical mba.com, shout out and thanks in advance to everybody who's going to give us feedback on some of these alternate wealth strategies we talked about today. This pod, this community is an ongoing conversation. We appreciate your input as always. And Bossman I appreciate your input here today. That is it. For this week, I gotta hit the road. My vacation is over.
But I'm looking forward to being back in Austin and doing some amazing things with our team, our businesses in this community in the month of September. That's it, boss man. I'll see you soon. And we'll see you all next week and a big thanks to smash digital for sponsoring the show.
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